India's service sector growth at 5-month high on new orders

Investec's Services Purchasing Managers' Index slipped to 59.1 in March from 60.6 in February
Investec's Services Purchasing Managers' Index slipped to 59.1 in March from 60.6 in February
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07 April, 2017

Markit's final U.S. services business activity index fell to 52.8 from 53.8 in February, missing expectations for a reading of 53.1. Moreover, the latest reading signalled a marked increase in business activity and the fastest pace of expansion since December 2016.

According to the survey, nearly one-quarter of companies anticipate higher activity levels over the coming 12 months, with confidence attributed to improved advertising and strengthening demand conditions.

"Much of the disappointment in growth so far this year has been evident in consumer-oriented sectors, in part linked to spending and incomes being squeezed by higher prices", IHS Markit chief business economist Chris Williamson said. "The country's rapid recovery from the demonetization-related downturn was accompanied by job creation and softer inflationary pressures". This helped Singapore's private sector firms increase the level of preproduction stocks for the first time since February a year ago.

However, cost pressures led to the fastest rise in prices since late 2008.

The prediction ahead of an official estimate from the Office for National Statistics later this month was made following the publication of the Markit/CIPS services purchasing managers' index (PMI) for March.

"New business and output rose for the second straight month in March, with rates of expansion accelerating in both cases. At the same time, factory new orders increased at the strongest rate since last October", the report said.

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Activity in the UK's dominant services sector rose at a faster-than-expected pace in March.

But conditions outside Britain had clearly improved and there was uncertainty about how quickly consumers will respond to higher prices, he said in a note to clients.

Higher workloads forced service providers to raise their workforce numbers in March. The employment index was 54.4, up from 53.6 and marking the fastest rate since the end of 2007.

The performance of the services sector, which accounts for around four-fifths of the United Kingdom economy's output, has been a vital driver of growth.

The index remained above the 50 threshold, which separates expansion from contraction, for the sixth consecutive month. "This is shown by firms willingness to hire additional employees and reinforced by stronger confidence towards the 12-month outlook for output".

The RBI policy statement is expected later today. A recent uptick in inflation has been largely due to rising oil prices, evidenced by the fact that the core rate, which strips out volatile items such as food and energy, remains stubbornly low.


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